How To Think Like A Successful Entrepreneur.

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Successful entrepreneurs think about their business in value terms, and they recognize that they do not themselves determine the value of their offering — the consumer of the final good does.

Entrepreneurship is about treading new ground. It is about taking a step no one has taken before, at least not in that same way or in the same place. So it should not be surprising that much of the scholarly literature on entrepreneurship, since Richard Cantillon in the early 1700s, has focused on entrepreneurship as uncertainty-bearing.

Although “bearing uncertainty” might be what entrepreneurs do in the economy from a theorist’s point of view, it is not — and should not be — the rationale for starting a business. After all, uncertainty means the outcome is unknown, which in turn means it could end up ugly. In other words, uncertainty is a cost — it is a burden on the entrepreneur’s shoulders. Entrepreneurs are right to attempt to avoid the uncertainty.

The fact is that theorists have it both right and wrong. Yes, entrepreneurs bear uncertainty because they are the ones getting the reward as profit and also the ones suffering the loss if things do not work out. But that uncertainty-bearing characterizes entrepreneurship does not make it the point of being an entrepreneur. Rather, it is a “necessary evil.”

What Successful Entrepreneurs Understand

Successful entrepreneurs, both in the past and present, understand the actual meaning of uncertainty. Those who already experienced success have often learned it the hard way, through experience. Those who are more likely than others to become successful have understood it in the abstract or have the right gut feeling. Regardless of which it is, past or present, they understand that uncertainty is “worth it.”

What this means is that they don’t focus on uncertainty, but accept it. Entrepreneurs choose to bear uncertainty much like someone putting in the hard work — perhaps 10,000 hours’ worth — knows that hard practice is the means to achieve success. How to endure those endless hours of seemingly never-ending tedious work? Eyes on the prize.

Successful entrepreneurs recognize the prize and what it takes to get there. They realize that the only way their business can convince customers to buy from them and to beat the competition is to provide value. To the extent they are not simply lucky, successful entrepreneurs rely on a value-dominant logic: they place the end value of their efforts first, and direct their efforts to maximize value.

There are three key components to the value-dominant logic that help you apply it in your business:

  1. Value is the entrepreneur’s super power.

Entrepreneurs bear uncertainty because it is the only way of doing something different, something new, and to bring about value greater than everybody else has. After all, doing what someone else is already doing is not a way to set yourself apart. It is also not a way of being truly successful. To be successful, you need to develop your super power: to figure out, focus on and deliver real value.

  1. Value is subjective.

It sounds strange, but it is true: Value is subjective. This does not mean value can be anything or that it is relative or that there is no such thing as real value. It just means value is in the eyes of the beholder. The important lesson here is that you, the entrepreneur, do not determine what value is. Your job is to figure out how what you offer can be of value to others. That is what you should be focusing on, not on what you think would make your offering “better.”

  1. The consumer is the ultimate valuer.

Any entrepreneur, whether in B2C or B2B, should recognize that, ultimately, the consumer is king. Or, as scholars put it, the consumer is sovereign. If you are selling directly to consumers, it is obvious enough. You cannot place a sale unless consumers value your offering. But even in B2B you cannot stay in business long unless what you contribute to the economy is of value to the final consumer. Even if your customers like what you are doing, unless the consumer of the final good likes it you’re not going to sustain profitability.

Another way of adopting the value-dominant logic is to adopt the “4 Vs” model developed by Hunter Hastings of the Economics 4 Business podcast. He summarizes these points for thinking like a successful entrepreneur using four value statements: Value potential, understanding and assessing potential consumer subjective value; Value facilitation, making it possible for them to consume; Value capture, how much the firm realizes of the value facilitated by a value ecosystem that the customer orchestrates; and Value agility, how well does the firm respond to changing consumer-preferences and competitive propositions and how well does the firm sustain a continuous delivery of innovation to the consumer.

The point is not the terminology or model, but the lesson: that value should come first. And when you place value first, and recognize that it is subjective and for the consumer, the burden of uncertainty becomes bearable. It is but a means for attaining the end. It is costly for sure, but it is a necessary cost in order to pioneer production and break new ground.

Importantly, the burden of uncertainty is justifiable because it makes it possible for you to bring about value. This point is key to being successful.

108. Per Bylund and Mark Packard: Radically Reshaping Business Thinking via Subjective Value

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In a recently published paper titled “Subjective Value In Entrepreneurship,” Professors Bylund and Packard apply the principle of subjective value to generate significant new avenues of thinking for entrepreneurial businesses to pursue.

Download The Episode Resource10 Radical Shifts in Business Thinking – Download

Key Takeaways & Actionable Insights

Re-think value.

Business schools teach value creation. But their definition of value is faulty, based on a profound misunderstanding. Value is not objective and measurable, as in the business school paradigm of generating more of it. Value is subjectively understood and experienced. It’s a motivation for action (people have a desire to achieve experiences that they value) but it’s immeasurable. It is emergent from complex social systems and patterns of interaction between individuals, not something “created” by businesses.

Re-think the economics of value and value creation.

Value is created by consumers via their experiences. Producers are servants to consumers and their preferences; producers seek to convince consumers to allow them to provide for their wants. Since consumers have alternative courses of action, producers must scrutinize and revise their plans continuously to conform with consumers’ changing choices. This is consumer sovereignty, an essential element of a value-centric business model.

Re-think the role of the consumer in the economic system.

Consumers facilitate their own consumption. They pursue their own individual well-being, including by expressing their wants and needs to producers. The demanding of solutions is the task of the consumer, as is the choosing between available and expected alternatives. They experience value uncertainty (their preferences may end up dissatisfied) and they actively assess and learn about entrepreneurially produced alternatives that are available. They learn cumulatively as they amass consumer experience. Thus the role of value innovation and solution discovery is, actually, the consumer’s and not the producer’s. Innovations are generated by consumers in their never-ending pursuit of higher-valued satisfactions. Consumers’ own imagination and understanding shape their subjective experience.

Re-think the role of the firm.

The producer’s role can be divided into value proposition creation, value facilitation and value capture. Producers respond to consumers’ dissatisfactions with the status quo by devising and assembling new value propositions – features and benefits responsive to consumer wants, aiming to generate feelings of well-being and satisfaction. Producers become partners in the consumer’s value learning process, providing a comparatively better offering than others, so that the consumer prefers it.

The consumer generates a willingness-to-pay, when they feel that the use value of an entrepreneurial offering exceeds the price they are asked to pay. The offering now has exchange value to the consumer. This money magnitude does not indicate the actual subjective value to the parties, but it does generate profit (if it covers production costs) that can be used in the market.

Re-think business models.

A business model captures the fundamental idea of consumers and innovative businesses jointly navigating a shared experience of value uncertainty, in a never-ending quest for higher value states from which they can both profit. This co-navigation process must be built in to business model design, and business model innovation consists of new co-navigation pathways and new ways of sharing. For example, the concept of generative business models we explored in E4B episode #104 gives a greater role in co-navigation to consumers as a way of generating new value.

Management without measurement.

Subjective value represents a challenge to theories of business that adopt a “make the numbers” approach to performance. When value is immeasurable, business processes must be assessed via variables such as the quality of understanding of the consumer and their preferences, the quality and accuracy of empathic diagnosis, and the trust generated with consumers to adopt the business as a co-navigator of value uncertainty. It is possible that survey data can be helpful. More fundamentally, Austrian economics can provide a set of principles for management without measurement.

One approach is qualitative models, which can be designed and subsequently calibrated with marketplace activity. One form of such models is simulation, using agents that represent the emotions and uncertainty felt by consumers in markets. This is a direction that technologically-augmented entrepreneurship may take.

Re-think output metrics.

Similarly, in a world of subjective value and qualitative assessment, concepts such as KPI’s (key performance indicators) can’t realistically be applied. Concepts such as profit and free cash flow continue to apply, given full recognition that they are reflections of accounting conventions, because they indicate the sustainability of the firm and its business model. But new output metrics for subjectively-experienced consumer value and for satisfaction and well-being remain to be invented.

Re-think organizational design.

Subjective value applies not only to consumer activities but equally to entrepreneurial activities. Professors Bylund and Packard present entrepreneurship as an individual journey, one that is primarily mental. The journey is a series of imaginations, judgments and learning over time regarding what problems to solve, what resources are available, what those resources can do, what can and should be done with them (in combination), how to do it and why (i.e. what are the goals and ends the prospective entrepreneur aims for).

Entrepreneurship is chosen. In an entrepreneurial business, many individuals are engaged in — choose — entrepreneurship. Much of their motivation lies in unleashing their imagination, processing their own learning, and finding purpose and meaning. Organizational design becomes the search for the best structures to free the individual to make entrepreneurial choices, to apply their individual imagination and explore the co-navigation of uncertainty with consumers. The firms that do this best will be the ones that succeed in value facilitation and value capture.

Re-think motivation and incentives.

Why do individuals choose entrepreneurship? As Professors Bylund and Packard point out, money magnitudes do not express much of entrepreneurial motivation. Subjective values of purpose, meaning, achievement, personal fulfillment and others are primary. These can not be captured in salaries, bonuses, awards, promotions and titles. The firms that master subjectivist motivations will be able to attract the best talent.

Re-think the social contribution of business.

Entrepreneurial capitalism is under fire in America today. Profit is seen as exploitative, and employment is often viewed as restrictive and oppressive. The ends of business are sometimes portrayed as conflicting with those of society.

An understanding of subjective value would generate a perspective of business as the facilitator of satisfaction and well-being in society. Business creates jobs and incomes for consumers, enabling them to facilitate their own value both in the form of psychic reward in their work and user satisfaction in their consumption value experiences. Individuals, families and communities are all beneficiaries of this value generation.

Businesses provide consumers with continuously improved goods and services at ever-lower costs, providing the means for consumers to achieve their desired experiences and satisfactions. This provision of means is generated entirely in response to consumers’ expressed wants and preferences.

Contribution to societal well-being is therefore the sole end of entrepreneurial business.

Additional Resources

10 Radical Shifts in Business Thinking (PDF): Download Here

“Subjective Value In Entrepreneurship” by Mark Packard and Per Bylund (PDF): Download Here

“The Value Generation Business Model” (video): Watch Here

Corresponding PowerPoint (Download Here) and Keynote Slides (Download Here)

The Austrian Business Model (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

Apple Podcasts, Google Play, Stitcher, Spotify

“Subjective Value In Entrepreneurship” by Mark Packard and Per Bylund (PDF): Mises.org/E4B_108_Article

“The Value Generation Business Model” (video): Mises.org/E4B_108_Video

Corresponding PowerPoint (Mises.org/E4B_108_PPT) and Keynote Slides (Mises.org/E4B_108_Key)

“The Austrian Business Model” (video): Mises.org/E4B_108_ABM

107. Ivan Jankovic: The Special Understanding of Entrepreneurship by Americans of the Austrian School

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Austrian economics has always been on the leading edge of innovative thinking applicable to business. Back in the last century, there was a group of American economists of the Austrian school who greatly advanced theories related to subjectivism; that is, the role of human beliefs and preferences, and of the market as a process. Here are some of the insights they gave us about entrepreneurial business.

Download The Episode ResourceEntrepreneurship Drives Markets, Innovation, and Value Generation – Download

Key Takeaways & Actionable Insights

The function of entrepreneurship is the generation of new subjectively perceived value.

These economists got the name The Psychological School, because they understood that value is a function of human feelings, preferences and beliefs. The secrets to the successful pursuit of new value are not found in data and mathematics, but in human motivation.

The activity of entrepreneurs is the development and implementation of value-generation business models.

The twentieth-century economists we talk about on the podcast this week would probably never use the term business model. But their concept of the market as a process governed by subjectivism would embrace this modern term. A business model is a recipe for identifying value potential — an analytical outcome of understanding customer preferences — assembling a value proposition — a creative act of the entrepreneur — and enabling the customer to experience value, some of which can be captured by the entrepreneur via exchange if the business model is well-constructed.

Who are entrepreneurs?

Historically, some economists have debated whether entrepreneurs play the role of managers of the assets and activities of firms, or the role of owners establishing the asset base and purpose of the firm, or the role of capitalists providing the enabling financial capital. From the subjectivist point of view, it’s not a difficult question. Entrepreneurs are those engaged in the business of pursuing and generating new value. They might play one or more roles (manager, owner, capitalist) at different times in the pursuit.

Those in business firms who do not have an entrepreneurial role are the bureaucrats engaged in governance actions with no customer value, imposed by external influencers, usually government.

How do entrepreneurs generate value?

These economists understood the market as a process of individuals interacting to exchange. Therefore, they were able to establish that entrepreneurial value generation is a process and that it can be systematized (which is the essence of our Economics For Business project). A process has a beginning — in this case the identification of value potential, which requires a deep understanding of subjective value) and an end — the facilitation of value to the point where the customer can easily exchange for it, activate it, and experience it. It’s not necessarily linear, rather it’s recursive and dynamic, a continuous creative flow of knowledge gathering and learning and responding via innovation.

How are entrepreneurs compensated?

These economists realized that it represents a poor reflection of real life to identify the compensation of entrepreneurs solely with profit. On the monetary axis, they can just as well be paid in wages or dividends or other forms of monetary compensation. On the non-monetary axis, these subjectivists fully understood the concept of psychic profit: that entrepreneurs can do what they do for their own individually-perceived motivations, including achievement, fulfillment, the reward of serving others, and the purpose and meaning found via the entrepreneurial journey.

 

Additional Resources

Entrepreneurship Drives Markets, Innovation, and Value Generation (PDF): Download Here

Professor Jankovic’s Book, Mengerian Microeconomics: The Forgotten Anglo-American Contribution to the Austrian School – Buy on Amazon

The Austrian Business Model (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

Apple Podcasts, Google Play, Stitcher, Spotify

106. Mauricio Miller: Entrepreneurship as the Path Upwards From Anywhere, for Anyone

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Entrepreneurship is the best pathway for all people out of unsatisfactory economic circumstances.

Mauricio Miller, who arrived in the US as a poor immigrant from Mexico, and who also experienced living in some of America’s worst neighborhoods, spent over 20 years running social services for people growing up and living like he did. His conclusion: social services are the worst policy for such people. It is entrepreneurship that will open up the pathway out of the neighborhoods and out of the traps of low income and limited prospects. Entrepreneurship lifts up individuals, families, and communities.

Key Takeaways & Actionable Insights

Job creation programs are not the answer. In the US, people can get jobs, but they are often on a dead-end track that doesn’t generate learning or leverage-able experience — waiter, assistant, security guard, etc. Outside the US, even these jobs might not be available. Often, people with these jobs are entrepreneurs “on the side”, exchanging in the informal economy. This is just another indicator how important entrepreneurship is to upgrading people in low-income situations.

Entrepreneurship is inherent in people.

Is entrepreneurship hard? Is it too daunting for some? Does it require skills that only special people possess? Absolutely not. People have the capacity, the capability and the creativity. They are typically smart and determined. The requirement is simply to let that come out — to remove the constraints. Entrepreneurship is already inherently there.

Furthermore, people are motivated for entrepreneurship. Everyone has a particular talent, or at least their own interests, and they always perform better when they’re working on what interests them. And people want to run their own life, and make their own decisions.

Release the constraints.

The constraints that face them trace to being stereotyped and labeled, and these are barriers to credibility. Reduced credibility makes it hard to institute relationships, establish partnerships, to get loan financing, and generally to build the network support and capital required to advance their businesses. Mauricio says that if we don’t label them, and simply let talent and commitment shine through, all kinds of people can demonstrate entrepreneurial potential and achievement.

Entrepreneurial achievement and success will emerge when people are unconstrained.

How does the entrepreneurial movement get started? Naturally, and without intervention. In any community, there will be one or more individuals who become “leading lights” in the sense of trying something unusual or unprecedented, and succeeding. The definition in sociology and innovation diffusion theory is “positive deviants” — those who deviate from the norm or from history with a successful outcome. Leading lights is a better term.

The leading lights are followed by early adopters, who see a strategy that is successful and copy it or follow it. Then comes community support, which Mauricio characterizes as mutuality — everyone in the community eager to help anyone who can demonstrate success.

In his book The Alternative, Mauricio tells the story of Ted Ngoy, a Cambodian immigrant to the Los Angeles area of California who got a job at Winchell’s donut chain. He quickly absorbed the techniques of donut making and decided to open his own shop. Members of the community pooled savings to provide equity capital to buy equipment. The single store became successful and Ted opened more. The mutuality of the neighborhood was activated and neighbors became delivery drivers and ingredient wholesalers and came together as a supply chain and value creation network.

The word spread across California and Cambodian immigrants in San Francisco and elsewhere started reproducing Ngoy’s strategy. In a more general sense, the learning is: people, whoever they are, can start and run a business and make some money and become independent.

A new mindset: No plan, no policy, no structure, no institutionalization.

Mauricio’s key insight is that any intervention by government or charities or social services that aims to provide a plan or a process or a structure or to configure institutionalized support is not only not needed, it is destructive. It distorts and undermines the natural human motivations and drives that people draw on in entrepreneurship. The opposite approach — or no approach — is the best. Honor the natural preference of communities for self-help and sharing — mutuality as Mauricio has named it — and let them discover the pathways for themselves, find the knowledge, pool the savings, get access to the technology, use their network to connect to the needed skills.

Entrepreneurship is catching.

Once the bright lights shine, once the positive deviants emerge, once the early adopters find follow-on success, once the natural mutuality builds the supply chain and the support network, no intervention or encouragement or policy is required. Stand back and admire.

Additional Resources

The Alternative: Most of What You Believe About Poverty Is Wrong by Mauricio Miller: Buy it on Amazon

Family Independence Initiative: FII.org

Community Independence Initiative: CIIAlternative.org

Mutuality Platform: Click Here

The Austrian Business Model (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

Apple Podcasts, Google Play, Stitcher, Spotify

Fighting Poverty With Entrepreneurship.

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My father, the late Reverend Gilbert H. Caldwell, Jr. was a Civil Rights Movement “foot soldier” who knew and marched with Dr. Martin Luther King, Jr. As a child of the “Movement,” I paid close attention to Dr. King’s strategic approach to transforming the United States. Most people are not aware that the official name of the march where he delivered his famous “I Have a Dream” speech was the “March on Washington for Jobs and Freedom.” In this historic speech, he states that it is tragic that some people live “on an island of poverty in the midst of a vast ocean of material prosperity.” Dr. King knew that racial equality would only be sustainable if residents of poor communities had jobs that enabled them to pay their monthly bills. I am convinced that if he were alive today, Dr.King would say that the economic stability of communities is the foundation of the social well-being of countries.

No country has sufficient funds to fight poverty in perpetuity. Current “top-down” poverty reduction programs providing a “safety net” have had little success reducing systemic poverty. The current safety net programs trap families in a net of economic instability that is difficult to untangle. It is time for a “people up” poverty reduction program designed to provide a “safety trampoline” that bounces people up from poverty to the middle class. Poverty reduction strategies must be based on the belief that if you give someone a fish you can feed them for a day. However, if you help them start a fishing business you can feed a community for a generation.

The United Nations made “Ending poverty in all its forms” its number one Sustainable Development Goal because the inability of people throughout the world to feed, house, clothe and educate their families is a“cancer” on society that can be cured if innovative new approaches are implemented at the community level.  The Grameen Bank microfinance program, created by the 2006 Nobel Peace Prize winner Mohammed Yunis, is an example of a successful innovative program that works very well in certain circumstances. Unfortunately, the community development bank approach has limited applicability in many locations. One of the most successful ways to reduce poverty in the Group of Twenty (G20) countries is to implement a place-based program called “Entrepreneur Zones” or “EZones.”

Specific words can be a powerful tool in generating support for a community revitalization program. The term “Entrepreneur” refers to a specific person committed to utilizing novel approaches to creating value. The term “Zone” is a specific location with clear boundaries. Historically, poverty reduction programs have been disconnected “social support” programs that exist as long as there is political support and government funding. The EZones are a“social investment” program designed to help entrepreneurs create jobs and generate greater income and tax revenue. One of the key components of the program is the provision of quality job training and placement for residents. By investing in EZones with public funding, private investment, grant funds, and tax credits, economically challenged communities can generate the revenue and jobs needed to reduce local poverty in a sustainable way (without the need for long-term government funding).

One of the best examples of an Entrepreneur Zone was the Greenwood Section of Tulsa, Oklahoma. Plessy v. Ferguson was a landmark Supreme Court decision in 1896 that upheld the constitutionality of racial segregation in the US. Black communities survived this racist ruling by developing, what we would consider today as, segregated EZones that succeeded economically because of thriving black-owned small businesses. These neighborhoods fought against discrimination by developing healthy communities rooted in entrepreneurship. The wealthiest of these communities was the Greenwood Section of Tulsa. This community was so strong economically that it was nicknamed “Black Wall Street.” White supremacists and the local government were so jealous of the economic success of this community that on June 1, 1921they bombed it by plane and attacked it by foot. Tragically, more than 300 people were killed and 200 businesses destroyed simply because the black community was living the “American Dream” of entrepreneurial success.

One positive lesson that we can learn from this embarrassing American history is that when economically challenged communities are given the opportunity to develop entrepreneurial businesses they can flourish and transform poor communities into middle-class communities. Government leaders committed to implementing sustainable solutions to chronic poverty should establish EZones in economically challenged communities around the world. Businesses in these locations should receive public funding, regulation relief, investment fueled by tax credits, grants, and entrepreneurship training. In addition, qualified nonprofit organizations should provide poverty-informed job training and placement programs helping the long-term unemployed find jobs. Government programs providing housing, education, and health services should be aligned and leveraged to provide more comprehensive and effective support to residents of the EZone community. By creating Entrepreneur Zones in economically challenged communities, we can move the world closer to Dr.King’s “Dream” of a society where all people live in an “ocean” of financial stability and social well-being.

 

This article by Dr. Dale G. Caldwell was first published at groupofnations.com

DR. DALE G. CALDWELL IS THE CREATOR OF THE ENTREPRENEUR ZONE PROGRAM AND A PROFESSOR AND EXECUTIVE DIRECTOR OF THE FAIRLEIGH DICKINSON UNIVERSITY ROTHMAN INSTITUTE OF INNOVATION AND ENTREPRENEURSHIP. HE IS THE FOUNDER OF THE DALE CALDWELL FOUNDATION (DALECALDWELL.ORG).

105. Per Bylund: Austrian Economics is the Science of Business Success

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For any size and any type of business, the generation of value requires more than strategy, planning, and executional excellence.

It calls for the establishment, communication, and internalization of value-generation principles, solidly founded and consistently applied. This concept of the long-term, dynamic application of unchanging principles is the essence of the Austrian approach to business.

Download The Episode ResourceLong Term Value Generation As A Science Of Business Success – Download

Key Takeaways & Actionable Insights

In a podcast conversation, Professor Per Bylund reviewed and critiqued the popular business book The Science Of Success, and focused on these principles or guidelines.

A Vision For Long Term Value

Vision in this context is not the transcendental futurism of a CEO-with-superpowers often envisaged in business school texts. This is Austrian vision: a deep understanding of what constitutes value and how to act to realize value over time, rejecting short-term opportunism.

Value, of course, is subjective, determined by consumers, and so businesses that generate long term value can be seen as creating value for society, a laudable ethical contribution to social well-being.

Virtue and Talents

It’s unusual to encounter the word virtue in a discussion of business. In this context, it applies to the selection and hiring of a team that will collaborate on the long term creative task. This requires dynamically melding people with the right values, skills and capabilities, and the capacity to develop skills and capabilities even further. Hiring becomes one of the most important and most value-generating business functions.

Knowledge Processes

Entrepreneurial value creation is a knowledge-based and knowledge-intensive process. Knowledge is actively pursued, curated, combined, and processed. Knowledge advantages may be available, where firms are able to craft uniquely superior processes, methods and technologies. Crucially, these are never permanent. They can always be competed away, and rendered redundant by changing markets and evolving consumer preferences, although some forms of knowledge advantage, such as brands and culture, can be more long-lasting. Knowledge processes must include not only knowledge management but also the creation of new knowledge.

Decision Rights

Business books often talk about organizational design, but less often about the details of the processes of decision making. Whether the organization is hierarchical or flat and networked, it must still be able to make decisions and have them accepted and supported and implemented. Putting people in the right roles with the right degree of authority and accountability is the business challenge. This is different from the mythical business school idea of “leadership”; it’s a more a matter of productive collaboration among multiple individuals and teams, all of whom have some authority. The concept of decision rights breaks the ties and the logjams and enables corporate dynamism.

Incentives

The idea that behavior is responsive to incentives is core to the science of economics, of course. The same is true in business, and it’s important to use economic reasoning to get incentives right and avoid adverse incentives. The proposition given in the Science Of Success is that people are rewarded according to the value they create. Thus, we come full circle, back to the vision of value that constitutes the first of these 5 principles. If a business is clear on its definition and understanding of value, then it can be successful in incentivizing its people to generate that value.

Additional Resources

Long Term Value Generation As A Science Of Business Success (PDF): Download Here

QJAE Special Double Edition on Entrepreneurship (PDF): Download Here

The Austrian Business Model (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

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